Appendix 1—Government response
This memorandum sets out the Government's response
to the Committee's report published on 11 January 2010.
The Government thanks the Environmental Audit Committee
for its continued interest and consideration of the carbon budgets
framework and for its conclusions and recommendations.
The UK Government has the world's first long-term
legally binding national framework to reduce emissions in order
to tackle the dangers of climate change. The Climate Change Act
2008 put in place a system of five year 'carbon budgets' to set
the trajectory towards our long term target to reduce greenhouse
gas emissions by at least 80% by 2050 below 1990 levels.
The UK's first three carbon budgets, which cover
the periods 2008-12, 2013-17 and 2018-22, came into force on 31
May 2009. These require emission reductions of just over 22%,
28% and 34% respectively, compared to 1990 levels. The UK is committed
to tightening its carbon budgets in the light of a comprehensive
global agreement, and the sharing out of a new EU target.
Last summer, the Government published The UK Low
Carbon Transition Plan. The Transition Plan sets out
how we will meet our first three carbon budgets and represents
the step-change in emissions reductions that the Committee on
Climate Change rightly says is needed. The Plan also announced
that we will pilot a system of departmental carbon budgets covering
every central government department. The sharing of the UK budget
represents a commitment from all parts of government to taking
action to reduce emissions.
At the time the EAC's report was published the Chair
of the Committee rightly pointed out that setting carbon budgets
involves making a series of difficult political judgments that
balance what science is telling us with what is affordable, feasible
and politically acceptable. We welcome the fact that he feels
that on balance the Government has got these judgments right.
We share the view that delivery is equally important as we enter
this critical phase in acting on the ambitious commitments set
out in the Transition Plan. Indeed, since the Plan was published
last summer we have already taken a number of actions, including
amongst other things:
- setting out the world's most
ambitious plans for clean coal; publishing for consultation the
draft energy National Policy Statements;
- working to ensure that access to the electricity
grid is not a barrier to low carbon generation;
- trialling new community-based and whole-house
approaches to ramp-up delivery of energy efficiency measures in
the home;
- looking at policy options to realise the significant
potential for emissions reductions from small businesses;
- developing new ways to encourage and support
local authorities to increase their role in the transition to
the low carbon economy;
- providing from 2011 an incentive of between £2,000
and £5,000 to people who buy an ultra-low emission car; and
- increasing funding to support cycling to £140
million over three years.
The global objective
1. We accept that the Government is broadly right
to use the objective of limiting the rise in average global temperature
to no more than 2°C as the backbone for its targets and budgets.
(Paragraph 12)
The Government welcomes this conclusion and also
notes the need for an international consensus for setting a temperature
limit. The Copenhagen Accord which was agreed by a broad range
of developed and developing country leaders at the United Nations
Framework Convention on Climate Change (UNFCCC) climate summit
in December 2009 includes agreement to take action with a view
to holding global temperature increases to below 2°C relative
to pre-industrial temperatures.
The UK is seeking to broaden, deepen and strengthen
the commitments made in the Copenhagen Accord, and to achieve
a legal treaty as soon as possible.
2. The Government must be ready, if needed, to
establish credible emissions reduction pathways that go well beyond
what is currently regarded as politically possible. (Paragraph
12)
3. The Government must shape and inform public
opinion so that the UK will be able, if needed, to reduce its
emissions at rates in excess of what is possible currently. (Paragraph
12)
The Government agrees that to support the UK's transition
to a low-carbon economy and meet its long-term target of at least
an 80% reduction in greenhouse gases (GHGs) by 2050, a credible
and ambitious emissions reduction pathway has to be in place.
To ensure that it is credible the Committee on Climate Change
is required by the Climate Change Act to provide advice on what
the carbon budgets should be to be consistent with that long term
target. In providing that advice and in setting the budgets, the
Act requires that a range of matters are taken into account including
scientific knowledge and economic, fiscal and social circumstances.
The Low Carbon Transition Plan published last summer
sets out a credible pathway to deliver the Government's first
three carbon budgets. It includes the policies and measures which
are projected to deliver emission reductions of 36% below 1990
levels by 2020, 2% higher than our binding target for that period.
The budgets set are consistent with the advice from the CCC and
we have made it clear that we will tighten our carbon budgets
once an ambitious international deal is reached, once there is
agreement within the EU on effort sharing of a tighter target
between Member States and following further advice from the Committee
on Climate Change (CCC).
The Government is also considering emissions reduction
pathways out to 2050. As described in the Transition Plan, the
Government is working with key stakeholders to better understand
the scale and nature of the changes required in the medium to
long term. As part of this "2050 Pathways" work, we
are investigating the range of possible contributions to decarbonisation
from all sectors, including both energy supply and demand. From
this analysis we will better understand which combinations of
action in different sectors would enable us to meet our emissions
and energy security goals out to 2050. We intend to publish the
findings of this work in March.
The Government agrees that it has a key role in shaping
and informing public opinion on the need for the UK to reduce
its emissions significantly over the coming years consistent with
the budgets it sets. This involves not only communicating information
but also proactively engaging with people—we recognise that
if we are to tackle climate change successfully we need the commitment,
energy, ideas and campaigns of a vibrant civil society.
A great deal has already been done. In 2007, the
Government introduced the ACT ON CO2
campaign to increase understanding of the
link between CO2, climate change and the choices we
make as individuals, and to encourage sustained behaviour change.
As part of the campaign website, we have developed the ACT ON
CO2 calculator,
an easy-to-use on-line tool allowing individuals and households
to calculate their CO2 emissions
and get personalised recommendations about what they can do to
reduce their own footprint.
We also continue to build strong relationships amongst
youth, faith and community groups, and the wider third sector.
In addition, through the £10 million Low Carbon Communities
Challenge we are working with local communities to explore pioneering
approaches to the development of low carbon communities
The Energy Saving Trust and the Carbon Trust also
continue to support the Government's objectives by providing advice
and support to individuals, communities and business organisations
to help them take climate-friendly action.
The Government will continue to review how best to
shape and inform public opinion in order to ensure that they are
able to help deliver the increasingly challenging UK carbon budgets
that will be needed in order to meet our 2050 target.
4. a) The Government's position in international
climate change negotiations must be predicated on getting emissions
to peak as soon as possible.
The Government agrees that global emissions need
to peak as soon as possible and start to decline by 2020 if we
are to establish a credible pathway for limiting the global temperature
increase to no more than 2°C.
Analysis by Lord Stern, in collaboration with the
United Nations Environment Programme,[1]
suggests that we are within striking distance of peaking by 2020,
providing that existing mitigation proposals from developed and
developing countries are delivered in accordance with countries'
highest intentions.
The Copenhagen Accord specifies that countries should
cooperate in achieving a peaking of global and national emissions
as soon as possible, recognising that the time frame for peaking
will be longer in developing countries.
A wide range of countries including the US, China,
Brazil, India, Indonesia, Japan, South Africa as well as the EU
have come out in support of global action and with specific commitments
and actions to reduce their emissions. Following the 31 January
deadline specified in the Copenhagen Accord, the UNFCCC has received
submissions from countries that together account for more than
three quarters of global emissions.
4. b) This will be very challenging but a failure
to reverse the rise in global emissions before 2020 could render
much of the UK's domestic action meaningless. But we have to prepare
for the worst, and in doing so drive home the message that a stitch
in time is worth nine. The Committee on Climate Change should
be charged with and resourced to advise on the changes to the
UK's targets for reducing emissions and carbon budgets which may
be required if global emissions do not peak by 2020.
The Government does not underestimate the enormous
challenge presented by climate change, in both scale and urgency,
and recognises the importance of global emissions peaking and
beginning to fall by 2020. But as the EAC has recognised the UK's
efforts need to be in the context of international action to reduce
emissions if they are to be effective. That is why securing an
ambitious international agreement is a UK Government priority.
The UK will be working hard to ensure that mitigation proposals
from developed and developing countries are delivered in accordance
with countries' highest intentions. For the European Union, this
means moving from 20% to 30% emissions reductions target by 2020,
compared to 1990, provided other countries also commit to their
highest ambition.
The Government remains committed to ensuring the
Committee on Climate Change receives sufficient funding to ensure
that the Chair and Members are supported by a strong analytical
secretariat to provide good-quality, independent advice. As explained,
when advising on carbon budgets and targets, the Committee is
already required to take a range of matters into account including
scientific knowledge about climate change and circumstances at
European and international level and will continue to do so when
providing its advice for future carbon budgets post 2020.
4. c) The impact of global emissions failing to
peak before 2020 should be also considered in Defra's Climate
Change Risk Assessment so that the implications of failing to
set and achieve the necessary budgets can be fully understood.
The Government has set the necessary carbon budgets
and is on track to deliver them. The UK Climate Change Risk Assessment
will make use of a range of emissions scenarios going out to 2100,
including those where emissions peak later than 2020, so an assessment
of the implications can be made. The Climate Change Risk Assessment
(CCRA) will be laid before Parliament in January 2012.
4. d) The Committee on Climate Change's Sub-Committee
on Adaptation should be asked to consider the implications for
adaptive action of global emissions peaking after 2020. (Paragraph
19)
The role of the Adaptation Sub-Committee (ASC) includes
providing advice on the Climate Change Risk Assessment (CCRA)
which will make use of a range of emissions scenarios going out
to 2100, including those where emissions peak later than after
2020. The Government is listening closely to their advice in developing
and scrutinising the CCRA and will continue to do so in the National
Adaptation Programme that will follow the CCRA in 2012.
5. An approach to setting emission reduction targets
based on equalising per capita emissions globally is sensible
and equitable. (Paragraph 25)
The EU's March 2009 Environment Council noted, based
on elements such as current population projections, that global
emissions per capita should be reduced to around two tonnes CO2
equivalent by 2050, and that, in the long term, gradual convergence
of national per capita emissions between developed and developing
countries would be necessary taking into account national circumstances.
6. The Committee on Climate Change is right to
use the IPCC's findings as a basis for its work. But they must
keep scientific developments under review, first as part of the
review that will be undertaken in preparing its advice on the
fourth budget period, and second following the publication of
the IPCC's 5th Assessment Report. The Government should provide
the resources to allow the Committee on Climate Change to strengthen
its scientific capability so that it can monitor developments
in between these formal review points. (Paragraph 29)
The Government recognises that the Committee on Climate
Change will need a strong scientific capability in order to assess
the validity and significance of individual research publications.
Paragraph 1(3) of Schedule 1 to the Climate Change
Act 2008 lists the skills and expertise that, taken as a whole,
should be represented by members of the Committee. This includes
expertise in "climate science, and other branches of environmental
science". The Committee have already announced that they
will conduct a review of the science alongside their advice on
the level of the fourth carbon budget (2023-2027), which must
be published by the end of this year.
As we have already said, the Government is committed
to the Committee receiving sufficient funding to enable it to
provide good-quality, independent advice. Within the provisions
of the Climate Change Act, the Committee is responsible for the
recruitment of staff to ensure that the level and structure of
its staffing, including numbers and expertise mix are appropriate
to its functions as an independent statutory body. Decisions on
funding levels are made by the UK Government and devolved administrations
(in consultation with the Committee) as part of the normal rolling
business planning process to reflect the Committee's statutory
and business objectives, and are taken in the light of wider public
expenditure decisions.
7. The Committee on Climate Change and the Government
should take into account that the growing evidence base for climate
change impacts is reducing levels of scientific uncertainty, emissions
are still growing and impacts are occurring faster and in more
damaging ways than was previously thought likely. Both the Committee
on Climate Change and the Government must be open to the possibility
that as our scientific knowledge and understanding grows the case
for taking action beyond the commitments we have already made
will grow. There is a case for taking a more precautionary approach
and adopting targets at the upper end or in excess of what is
currently recommended by the IPCC. (Paragraph 30)
The Government agrees that actions will need to be
kept under review in the light of improved scientific knowledge
and is continually monitoring the science and carefully assessing
the implications and significance of findings to ensure its evidence
base on climate change impacts is up-to-date, and well founded
for informing policy development.
In line with the Committee on Climate Change's advice,
we have also committed to tighten our carbon budgets, in the context
of an ambitious global agreement, which the Committee on Climate
Change have suggested could equate to around a 42%[2]
reduction in emissions against 1990 levels by 2020. This exceeds
the IPCC's recommendations that Annex 1 countries such as the
UK would need to reduce emissions in 2020 by 25-40% below 1990
levels.
The Climate Change Act contains explicit provision
for the Government to amend the 2050 and 2020 targets if there
have been significant developments in scientific knowledge about
climate change that make it appropriate to do so. Changing the
target would be subject to the advice of the Committee on Climate
Change. Similarly, the level of carbon budgets can be amended
if there have been significant changes affecting the basis on
which the level of the budget was originally set—which could
include developments in our understanding of climate science.
Again, decisions on amending the level of budgets would be subject
to the Committee's advice and the range of matters it is required
to take into account, including economic, fiscal and social circumstances
as well as energy policy.
8. There are currently no credible ways to reduce
emissions faster than the Committee on Climate Change has recommended.
The Government should prioritise reducing the likelihood that
temperatures will exceed 2°C down from a level that is 'as
likely as not' to at least 'unlikely'. This is more important
than aiming for a lower temperature rise target. In the meantime
the Committee on Climate Change should continue to ensure that
its advice is framed in terms of keeping the risks of exceeding
3 or 4°C to very low levels. (Paragraph 34)
The shift in likelihood of meeting the 2°C target
will ultimately depend on mitigation activities at an international
level, and the Government's priority here is to encourage adoption
of suitably stringent targets worldwide. The UK's targets are
already extremely challenging, and we agree with the Committee
(see recommendation 11b below) that our priority should be to
focus on achieving the targets we already have in place. We also
note that the statements of likelihood of achieving the target
are based on model uncertainty. The Department of Energy and Climate
Change is funding work to improve the performance of these models,
and this may in itself affect the assessment of this probability
(which might change for better or worse).
The Government agrees that the Committee on Climate
Change's advice should continue to be framed in terms of keeping
the risk of exceeding 4°C to very low levels. We note, however,
that the assessment of the temperature rise that constitutes 'extremely
dangerous' climate change may change with new research findings.
The UK's domestic targets and budgets
9. a) Ministers must ensure that policy makers
in all parts of government have a good understanding of the importance
of limiting cumulative emissions.
We agree that it is important for policy makers across
government to have a good understanding of the importance of limiting
cumulative emissions, especially given the long lifetime of gases
such as CO2 and N2O. The action we are taking
to reduce emissions will help reduce the accumulation of emissions.
The introduction of departmental Carbon Budgets will help increase
awareness and a greater understanding of the implications of policies
on emissions and the need to reduce them in order to meet the
increasingly tighter carbon budgets.
9. b) It is important that the Government focuses
action not only on meeting the carbon budget in any one year but
also on taking action now to ensure that targets and carbon budgets
can be met in the medium- to long-term.
We agree with the importance of looking at the medium
and long term as well as taking the short term action that is
required. For clarity it is important to note that the Government
introduced five year carbon budgets and one of the reasons for
setting these budgets at least three periods ahead is to provide
longer term certainty about the direction of travel and action
required—the UK Low Carbon Transition Plan sets out the
policies and measures that will be needed to meet the budgets
between now and 2022. We are required to set the fourth budget,
covering the period 2023-2027 by the end of June 2011.
The Government is already looking beyond 2020, to
our 2050 target, and in March we will publish our "2050 Pathways"
work which will set out possible paths to a low carbon economy
by the middle of the century.
9. c) The Government must pay close attention
to the milestones and indicators that the Committee on Climate
Change has set out, and will use to monitor the Government's progress.
(Paragraph 36)
The Government welcomed the CCC's work on indicators
for meeting carbon budgets in its response in January to the CCC's
first annual report and we intend to follow a similar approach
in our own monitoring of progress. Departments will be publishing
their Carbon Reduction Delivery Plans in March which will include
indicators and milestones against which they will monitor progress
in delivering emission reductions. Departments are taking the
proposed indicators from the CCC into account in developing their
delivery plans and where appropriate using them in their own indicator
set for monitoring progress.
10. Given the importance of limiting cumulative
emissions and stability in the policy framework the Government
should examine carefully the case for setting carbon budgets further
in advance than currently provided for by the Climate Change Act
2008. (Paragraph 39)
The Government disagrees with this recommendation.
Having carefully considered the alternatives, we believe that
the current approach, of having a long term target and carbon
budgets that must be set at least 11 and a half years before they
begin, provides sufficient certainty on the direction of policy
development. Setting budgets too far in advance would risk their
becoming too speculative which could undermine the certainty that
the carbon budgets framework has been established to provide and
possibly result in decisions and costs that fail to deliver much
long term environmental benefit.
11. a) We recommend the Government should move
to a target of a 42% cut by 2020 and should implement the intended
budget irrespective of whether or not the EU moves to a 30% target
for cutting its emissions. This should increase the long-term
stability of the policy framework by removing any uncertainty
about whether the higher target and budget might be imposed.
The Government has followed the advice of the Committee
on Climate Change in setting its budgets and does not agree that
the UK should be prepared to take on a higher 2020 target and
tighter carbon budgets in the absence of an ambitious global deal
that sees the EU move to a 30% target and a tighter EU ETS cap.
However, the Government has made clear that it will go further
following an ambitious global deal and is in the meantime aiming
to meet its carbon budgets through domestic action alone (outside
sectors covered by the EU ETS) in order to be well placed to make
the transition to the tighter carbon budgets to be set after a
deal is reached.
11. b) But the Government should only move to
increase the 2020 target once it is on track to meet its current
targets and budgets. (Paragraph 45)
On the basis of central emissions projections published
alongside the Low Carbon Transition Plan, we are on track to meet
our first three carbon budgets, and indeed are projecting that
emissions will be 44 MtCO2e, 64 MtCO2e and
39 MtCO2e below the budget in Budgets 1, 2, and 3 respectively.
These surpluses in each budget period provide a useful contingency,
given the inevitable uncertainty in predicting emissions 15 years
ahead.
In terms of emissions reductions achieved, in 2008
greenhouse gases emissions in the UK were 1.9 % lower than in
2007. This is in line with the Committee on Climate Change's analysis
that "meeting carbon budgets requires annual average emissions
reduction over the first three budget periods of 1.7% for the
Interim (currently legislated) budget".[3]
12. The Government must make clear the impact
of emissions from aviation and shipping on progress towards meeting
the UK's targets for reducing emissions and its carbon budgets.
The Government should ensure that any growth in aviation is within
the bounds set by the Committee on Climate Change and does not
impact adversely on the UK's targets for reducing emissions or
its carbon budgets. (Paragraph 49)
Domestic aviation and shipping are included in the
carbon budgets and the targets of the Climate Change Act 2008,
in line with international practice. As recommended by the CCC
in its 2008 report, emissions from international aviation and
shipping are currently excluded as there is no agreement on how
to allocate emissions from these sources to the inventories of
individual countries. The Climate Change Act nonetheless requires
that emissions from international aviation and shipping are included
by the end of 2012 or an explanation to Parliament must be given
if not. Prior to this the CCC is required to advise on the consequences
of including international aviation and shipping emissions when
it advises on the level of the fourth carbon budget. The Government
does however believe that, ideally, emissions from international
aviation and shipping should be addressed through a global, sector-wide
approach which is why we continue to work with our European and
international colleagues to press for a global solution through
the International Civil Aviation Organisation (ICAO) and International
Maritime Organisation (IMO) respectively.
The Government will be seeking to ensure that any
growth in aviation emissions is within the bounds suggested by
the Committee on Climate Change in their report of December 2009.
Of course reducing total UK emissions does not require all sectors
to reduce their emissions by the same amount; what is important
is that emissions reduce overall consistent with our targets and
budgets. There are fewer carbon abatement options in the short
to medium term for aviation than for many other sectors of the
economy. The target set for the aviation sector should reflect
this. We consider that requiring UK aviation emissions to fall
below 2005 levels (37.5MtCO2) by 2050 is a stretching
but achievable target, and the right level of ambition for the
sector. In addition, the Committee on Climate Change has acknowledged
that the UK's target for aviation emissions in 2050 is a reasonable
level of ambition for a developed country's aviation emissions.
Delivering the carbon budgets
13. The Government should investigate whether
there is a way to report emissions figures corrected for the economic
cycle as is done for the public service agreements on productivity
(PSA1) and employment (PSA8). (Paragraph 53)
The Government agrees that reporting greenhouse gas
emission (GHG) figures to reflect the economic cycle would have
the advantage of stripping out the effects of a recession or boom
in the economy, which could help interpret changes in the economy's
underlying structural emissions. However such changes should in
no way be used as mitigating circumstances for failing to meet
our carbon budgets. Although there is some flexibility in the
carbon budgets framework, in terms of limited banking and borrowing
provisions, the Government is legally bound to meet the budgets,
regardless of the effects of external factors.
In any case there are technical reasons why this
is less straight forward than reporting cyclically adjusted employment
or productivity data. In particular, as the UK moves towards a
low carbon economy, the smaller will be the effect of the cycle
on its GHG emissions. The relatively short history of GHG inventory
data makes this adjustment more difficult, and the complex changes
in the economy as we move towards a less carbon intensive structure
lessen our ability to predict these changes.
These factors make provision of cyclically adjusted
data difficult to provide on an ongoing basis. Nevertheless, the
Government will come to a view of what it estimates the effects
of the recession have been during the first carbon budget period,
once that point has been reached. This is in order to address
the same point made by the Committee on Climate Change on the
effects of the recession on the UK's emissions in the first budget
period.
The Government recognises that short-term reductions
in emissions due to lower than expected growth must not detract
from the urgency of tackling emissions; and equally that we need
to be able to measure decarbonisation during periods of rapidly
rising growth. This is why departments are developing indicators,
drawing on those suggested by the Committee on Climate Change,
to measure decarbonisation progress.
14. The Government must deliver the carbon savings
it has identified in the Low Carbon Transition Plan and then increase
the rate at which emissions are falling to meet the 2-3% annual
reduction recommended by the Committee on Climate Change. In doing
so it must take account of the milestones that the Committee is
using to monitor progress. The Committee on Climate Change must
watch closely to see how the Government acts to close the gap
in delivery it has identified. In its response to the Committee
on Climate Change's progress report the Government should make
clear how the Low Carbon Transition plan will be strengthened.
Strengthening the policy framework and bringing forward new measures
to get the UK to meet its existing targets and budgets are higher
priorities than setting more stretching targets, even if new targets
would be justified on the basis of science. Unless we are on track
to meet current targets, increasing targets will only widen the
shortfall in delivery. (Paragraph 56)
The Government agrees that emission savings identified
in the Low Carbon Transition Plan need to be delivered and our
emissions projections published alongside the Transition Plan
show reductions in line with what the Committee on Climate Change
has advised is needed. The UK's basket of six greenhouse gas emissions
fell by 1.7% between 2006 and 2007 and 1.9% between 2007 and 2008.[4]
On central projections, the policies and measures
in the Transition Plan will deliver reductions of around 36% below
1990 levels in 2020, exceeding the 34% reduction required to meet
the first three carbon budgets.
The Government is determined to strengthen and sustain
the momentum behind the Transition Plan and significant progress
has already been made to deliver the Transition Plan in all sectors
of the economy. The Government's response to the CCC's first annual
progress report[5]—which
set out the measures we have taken and those we plan to take—was
welcomed by the CCC, who described it as a "positive response"
which "starts to address issues that we raised, and moves
us closer to a framework that will drive required emissions cuts."[6]
Our response to the CCC's first annual progress report
set out the steps we have taken in key sectors of the economy
since publication of the Transition Plan. These include the announcement
of a 20% increase in the Carbon Emissions Reduction Target so
that an estimated 1.1 MtCO2 per year of additional
savings will be delivered by the programme in 2011, the announcement
of the Government's framework for the development of clean coal
and, in the Pre-Budget Report last December, the doubling to four
of the UK's commitment to fund carbon capture and storage demonstration
projects via a contribution from electricity suppliers, and the
announcement of £50 million to improve energy efficiency
through a boiler scrappage scheme. We will also refresh our planning
policy statement to reflect the latest climate change predictions
and ensure councils are planning for low carbon energy, low carbon
living and the low carbon economy.
The Government also welcomed the CCC's work on indicators
although, as the CCC itself has stated, individual indicators
should not be seen as firm targets. The Government agrees that
it is important to assess the implementation of policies and measures
in the round and this is one of the primary roles of the CCC which
reports, on an annual basis, on progress towards our carbon budgets.
As we indicated in our response to the CCC's first
annual report, we agree that there is a need for a more comprehensive
framework of indicators that enables progress on key policies
for reducing emissions and underlying drivers to be tracked. We
therefore intend to follow a similar approach to the CCC as part
of our own system for carbon budget management. All Government
departments will publish their Carbon Reduction Delivery Plans
in March, setting out how they will monitor delivery of their
departmental carbon budget. For departments which influence emissions
beyond the public sector operations that they are responsible
for, plans will include relevant sectoral indicators, taking into
account the Committee's monitoring framework.
15. a) The Government is right to try and over-achieve
against its carbon budgets but it should not be banking any over-achievement
from the first budget period into the second budget period.
The Government strongly supports the principle of
banking between budget periods as it encourages early action to
reduce emissions. However there are specific characteristics of
the first carbon budget (2008-2012) which make it unusual. Not
only was it set in spring 2009 when the period was already well
underway, in addition, although the Climate Change Act permits
banking between the first and second carbon budgets, the European
Climate & Energy package does not allow banking in the non-traded
sector between the 2008-12 phase and the 2013-2020 phase. Banking
savings between the first and second carbon budgets could therefore
leave the UK meeting its domestic carbon budgets but failing to
meet its EU commitments.
The Government recognises the need to ensure that
short-term reductions in emissions as a result of the recession
do not detract from the urgency of delivering low-carbon investment.
Therefore the Government announced in the 2009 Pre-Budget Report
that any overachievement against the first carbon budget arising
from the downturn should not be banked into the second budget
period. This also reflected the advice of the Committee on Climate
Change.
15. b) In responding to the call by the Committee
on Climate Change for a 'step change' the Government must strengthen
existing policies and bring forward new measures, which must be
rigorously monitored.
The Government agrees that a step change is needed
to meet our carbon budgets, which we consider was embodied in
the Transition Plan. The Committee on Climate Change welcomed
the plan as a "very comprehensive account" and "ambitious
high level vision" for meeting the carbon budgets to 2022.
See the response to Recommendation 14 for information on some
of the actions taken since the Transition Plan was published.
The Government will be rigorously monitoring delivery of all policies,
including through its evaluation of progress in meeting milestones
and indicators.
15. c) We understand the Government's desire to
use market mechanisms to ensure that emissions reductions are
delivered at least cost and in the most economically efficient
way but it cannot rely solely on market forces and may need to
support these by a regulatory approach and reforms to the fiscal
framework. (Paragraph 61)
We agree that market mechanisms alone are not sufficient
to deliver our low carbon objectives. The Transition Plan and
developments since then show the breadth of action taken by Government,
which include both regulatory and fiscal measures alongside market
mechanisms such as the EU Emissions Trading System (EU ETS). The
Government believes that the best approach to give the long-term
signal sought by investors is through setting the right, long-term
regulatory framework with a reducing cap on emissions.
The Government agrees that it has a strategic role
to play in ensuring the necessary investments in low-carbon power
generation. The EU ETS is at the heart of our approach to reducing
power sector emissions and we are committed to reviewing and tightening
the EU ETS cap further as part of a move from 20% to 30% in the
EU emissions reduction target for 2020, in the context of a new
ambitious global climate agreement.
16. How the Government's new approach to carbon
valuation within policy impact assessment is applied is as important
as the values used and we believe that there is a case for the
National Audit Office examining, in due course, what impact it
is having on decision making within government. (Paragraph 62)
The valuation of greenhouse gas emission impacts
in Government policy impact assessments is mandatory for all policies
with a significant impact on emissions. Revised appraisal and
evaluation guidance on the valuation of energy use and GHG emissions
has been recently published,[7]
explaining how to apply the new carbon values in assessing the
carbon impacts of all Government policies.
An assessment of a policy's carbon cost-effectiveness
in reducing emissions (£ per tonne of CO2e) must
be carried out if either a) the policy lifetime is less than 20
years and the stream of CO2e savings exceeds 0.1 MtCO2e
average per year, or b) the policy lifetime is more than 20 years
and the stream of CO2e savings exceeds 2.0 Mt CO2e
over the policy's lifetime and exceeds an average per year of
0.05 MtCO2e.
For PSA27 Indicator 6, the Government reports on
the cost effectiveness of all climate change policies introduced
since April 2008 by calculating the proportion of emission savings
which are expected to occur at a net cost (i.e. including all
quantifiable costs and benefits) below the relevant carbon benchmark
value. Where impacts that would be expected to have a material
effect on the indicator have not been quantified e.g. those relating
to innovation and to security of supply, a qualitative assessment
of the costs and benefits is provided.
This approach shows the average cost effectiveness
of the entire policy package, which will comprise measures covering
a range of carbon cost-effectiveness. To better reflect the proportion
of emissions reductions which are achieved cost effectively, a
methodology is being developed to measure the cost effectiveness
of emissions savings within policy packages.
17. The Government needs to present the cost of
action on climate change more clearly and to make clear that this
is not an additional cost but an alternative to the economic,
social and environmental cost of inaction. (Paragraph 63)
We agree. The UK's Low Carbon Transition Plan discussed
the costs of action versus inaction, concluding that "tackling
climate change is the lower cost option for Britain: failure to
act would mean more extreme droughts and floods, greater dependency
on imported fossil fuels and a missed opportunity to lead new
low-carbon industries."[8]
The Low Carbon Transition Plan presents today's value
of the public and private costs of the policies set out in the
plan, and that place the UK on track to meet its carbon budgets.
The total net costs over the lifetimes of the policies are estimated
to be between £25 and £29 billion.[9]
Greater detail is presented on costs of action in
the Analytical Annex to the Low Carbon Transition Plan, including
a breakdown of costs by policy (including and excluding valuation
of avoided damages through reducing emissions,[10]
and an assessment of the macroeconomic costs based on Government
computable general equilibrium (CGE) modelling which suggests
a GDP reduction of about 0.35% (relative to baseline) in 2020
and about 0.85% below baseline in 2050.
Future government reports and individual policies'
impact assessments will continue to provide equivalent detail
on the cost of climate change mitigation policies.
18. The Government cannot place too much reliance
on the price of carbon to drive investment in low-carbon technologies
as the current price is too low and too volatile. It must put
the right regulatory framework in place to ensure that the right
investment decisions are made. It is vital that we do not invest
in the wrong high carbon infrastructure. Through interventions
in the market and complementary policy measures, using the full
range fiscal and policy instruments available, the Government
should drive up the price of carbon steadily to a level where
renewable and low-carbon investments become economically viable.
(Paragraph 66)
The Government remains strongly committed to using
the carbon market, and ensuring there is a robust carbon price
to help drive emission reductions and provide certainty for industry.
However, the carbon price and its long-term certainty is only
one of many factors that affects investment decisions in low carbon
electricity generation and it is not the most significant. Gas
price volatility and its relationship to the electricity price
is a key driver, as well as uncertainty around future electricity
demand, impact of renewables, the oil price, construction and
capital costs and capacity factors.
The Government considers that there are risks in
intervening in the market to control the carbon price. The best
approach to give the strong long-term signal sought by investors
is through setting the right, long-term regulatory framework with
a reducing cap on emissions. Under the revised EU Emissions Trading
System (EU ETS) Directive, the EU ETS cap will fall by 1.74% (compared
to phase II) each year after 2013.
Longer term, the most effective way of strengthening
the carbon price is by limiting the supply of allowances by tightening
the cap. Our efforts are focussed on taking forward the work agreed
at Copenhagen to secure an ambitious legal treaty including an
increase in the EU's overall reduction target from 20% to 30%.
This would trigger a review of the ETS including tightening of
the cap.
As set out in the Low Carbon Transition Plan and
associated publications the Government is taking action in a number
of areas, for example, by providing financial incentives through
the Renewables Obligation, supporting carbon capture and storage
demonstration projects and is currently assessing the energy market
framework, the initial findings of which will be published in
March.
19. The Government must strengthen the policy
framework around energy efficiency as a matter of priority. It
must set out how it intends to drive forward investment in energy
efficiency to ensure that sufficient progress is made in the remainder
of the first budget period. (Paragraph 69)
The Government recognises the importance of energy
efficiency in meeting our carbon budgets. This is why we have
significantly ramped-up delivery under our existing policy programme
to ensure that key, low-cost measures such as domestic loft and
cavity wall insulation are rolled-out as rapidly as possible.
The Carbon Emissions Reduction Target (CERT), our
flagship household scheme, has already delivered insulation measures
to two million households since April 2008. The Government increased
the size of the CERT by 20% in 2009 and is now consulting on extending
the scheme for a further 21 months to the end of 2012, with a
strong focus on insulation.
The Government is also trialling innovative new approaches
to delivering energy efficiency measures, particularly the more
difficult, high-cost measures such as solid wall insulation and
Microgeneration. Launched in September 2009, the Community Energy
Savings Programme (CESP) aims to deliver comprehensive packages
of energy efficiency measures to some 90,000 households in around
100 low-income areas in the UK. CESP, like CERT, operates as an
obligation on energy companies, and is expected to drive around
£350m of investment in household energy efficiency by 2012.
Also underway are the Pay As You Save (PAYS) pilots.
The concept of PAYS is to remove the upfront costs from householders,
allowing them to repay the capital costs over an extended period
of time, with repayments that are less than the predicted savings
on energy bills.
The deployment of low-carbon technologies will also
receive a significant boost with the forthcoming Feed-in-Tariffs
scheme, which begins on 1 April 2010, and the Renewable Heat Incentive
which starts in April 2011.
The Warm Homes, Greener Homes Strategy published
on 2 March 2010 shows how our current programme will transition
to a new post-2012 policy landscape to achieve our target to cut
non-traded emissions from households by 29% by 2020.
The Government has in addition set interim milestones
of:
— by
2011, to have insulated 6 million homes;
— by 2015, for all lofts and cavities to
be insulated, where practical to do so and
— by 2020, for up to 7 million homes to
have had the opportunity for more significant eco uplifts and
all homes to have smart meters.
In the short to medium term, the carbon savings to
be achieved from tackling energy efficiency in the existing building
stock will outweigh the carbon savings from action on new-build.
However, as we look towards our longer-term targets, the action
we take on improving the energy efficiency of new-build becomes
significant, since around one-third of our 2050 housing stock
has yet to be built. That is why Government has announced its
policy that all new homes will be zero carbon from 2016, with
interim steps to be included in Building Regulations in 2010 and
2013. The Department for Communities and Local Government (CLG)
has recently consulted[11]
on changes to be introduced to Part L of the Building Regulations
later this year so as to achieve a 25% improvement in carbon reductions
from new homes. CLG is also currently consulting on the energy
efficiency standard to apply to zero carbon homes from 2016 and
on the interim standard to be introduced in 2013.[12]
In the non-domestic sector, Government has also announced
its ambition for new buildings to be zero carbon from 2019. CLG
is currently consulting on this, including on whether to develop
a specific standard for energy efficiency based on a similar approach
as we are consulting on for new homes.
Energy efficiency will also be increased in large
non-energy intensive public and private sector organisations[13]
with the introduction of the Carbon Reduction Commitment Energy
Efficiency Scheme (CRC) in April 2010 which will capture around
10% of the UK's emissions. The CRC will stimulate changes in behaviour
and infrastructure through introducing new financial and reputational
drivers. By 2020 the scheme is expected to have delivered emissions
savings of at least 4 Mt CO2 per year.
20. Each of the IPC's planning decisions will
have to be made with the imperative in mind that we must keep
within our carbon budgets and it is the sum of all its decisions
that will shape our emissions pathway. (Paragraph 70)
National Policy Statements (NPSs) set the framework
for decisions by the IPC, and have been developed in line with
the Government's stated policy objectives and the Transition Plan.
The planning system in itself is not the vehicle
for delivering all aspects of Government energy and climate change
policy and meeting our objectives for both tackling climate change
and improving our energy security will require a broad mix of
energy technologies.
NPSs for nationally significant infrastructure lie
at the centre of a new, more efficient, transparent and accessible
planning system and the draft overarching energy NPS sets out
how the energy sector can help deliver the Government's climate
change and energy security objectives by clearly setting out the
need for new low carbon energy infrastructure to contribute to
climate change mitigation.
Furthermore the energy NPSs make very clear the terms
on which new infrastructure can be approved by the IPC, including
the requirements on Carbon Capture Readiness and Carbon Capture
and Storage.
The Government is in addition, as stated earlier,
taking forward work to ensure the electricity market framework
can most effectively deliver on the low-carbon investment needed
in the long term, and will report its initial findings at Budget
2010. Our 2050 Pathways work is investigating the range of possible
contributions to decarbonisation from all sectors, including both
energy supply and demand and will report this spring.
21. The Government must put in place a mechanism
to ensure that the sum of the decisions taken by the IPC are consistent
with the carbon budgets and the milestones that the Committee
on Climate Change has set out to ensure the infrastructure needed
to meet future budget periods is put in place in the next few
years. The Energy and Climate Change Select Committee may wish
to examine this issue more closely as part of its scrutiny of
the National Policy Statements on energy. (Paragraph 71)
The Government does not agree that the IPC needs
to take into account the carbon emissions of individual planning
applications that the IPC consents. It is the Government and not
the IPC who is responsible for emissions targets. This is why
the draft NPSs are set out in accordance with the Transition Plan
and carbon budgets and our goals on ensuring secure supplies of
energy. The Committee on Climate Change is a statutory consultee
for National Policy Statements and must be consulted when Government
publishes a draft NPS or proposes to amend an NPS.
If the CCC considers that its indicators or milestones,
for example on energy intensity or wind capacity, are not being
met, we would expect the CCC to report its findings to Parliament
in its annual progress report thereby ensuring independent scrutiny
on these key issues. The Government would then need to set out
in its response to the CCC's report its views on such recommendations
and what action it intended to take. We will consider carefully
any recommendations made by the Energy and Climate Change Select
Committee on this issue before designating the national policy
statement.
22. The Government needs to address the issues
with measuring and reporting on greenhouse gases, particularly
the uncertainty around measures of gases other than carbon dioxide.
The Government should look carefully at the case the National
Physical Laboratory makes for the creation of a centre of excellence
in carbon metrology in the UK. (Paragraph 73)
The Government is aware of the issues associated
with uncertainties for non-CO2 gases. There is various
work in progress to address this issue. For example, research
is underway which we believe will reduce the uncertainties surrounding
our estimates of emissions from landfill methane, and separately
we have prioritised sectors such as methane from disused coal
mines as areas where we hope to be able to improve the accuracy
of our estimates.
In respect of the proposal by the National Physical
Laboratory (NPL) to create a centre of excellence, there are already
well established methodologies in place for estimating greenhouse
gas emissions, which have been agreed internationally under the
auspices of the UNFCCC and the IPCC. Although, as with any system,
there may be scope for improvement, this is not something that
can be done unilaterally by the UK but will need to be negotiated
with international partners. It is important to be aware that
we also have an existing verification process, which we believe
we can further develop to improve the resolution of the data by
increasing the number of monitoring sites. However, we are happy
to work with NPL in developing next generation methodologies for
measurability, verifiability and verification.
23. We recommend the Government explore the use
of a discount rate on offset credits and that the Government work
on proposals for discounting the carbon value of offset credits
within the EU ETS. (Paragraph 77)
The Government supports the flexibility provided
by the use of credits in the EU ETS, which helps the EU deliver
emission reductions at lower cost than if all the effort had to
be delivered within the EU.
We agree that this flexibility should be managed
in such a way that environmental integrity is preserved and that
a tonne of carbon bought through international offsets is as environmentally
robust as a tonne of carbon bought in the EU ETS market. The EU
ETS already sets strict limits on the quantity of offset credits
allowed in the system. The Climate and Energy Package has successfully
restricted access to credits from Clean Development Mechanism
(CDM) and Joint Implementation (JI) projects to 50% of effort
across Phases II and III (2008-2020). Improving the quality of
the Clean CDM should remain the primary way of ensuring the robustness
of offset credits and reform will continue to be a UK priority
in international negotiations.
This is one of the areas where progress was made
in Copenhagen, with a decision to move towards a benchmarking
approach to the generation of CDM credits. This will not only
help speed up the CDM project approval process but also improve
the environmental quality of credits. We also support the agreement
and development of large scale emission reductions through a new
mechanism based on ambitious benchmarks which could include host
country contribution to global emission reductions.
24. The Government should not score any EU ETS
credits purchased from Phase I as having reduced emissions in
the UK by an equivalent amount. We recommend that efforts should
be made to determine what actual savings were in order to provide
a sound basis for future budgets to deliver the necessary real
savings in emissions. (Paragraph 78)
Banking of allowances was not allowed from Phase
I and any problems with Phase I are now historical and do not
impact on the current or future reporting of emissions.
The way we account for carbon trading is in line
with the international carbon accounting rules. We also publish
this information in a completely transparent manner so that the
contribution of trading can be clearly seen. It would be misleading
to count actual UK emissions from the traded sector towards our
carbon budgets, rather than the UK's allocation under the EU ETS
because, for example, although we might report reduced emissions
in the UK, these might actually be displaced by increased emissions
elsewhere in the EU, or vice versa.
Going forward, we have good quality verified EU ETS
emissions data from 2005 onwards against which emissions reductions
can be judged for the whole of the EU. This was a major success
of the first 'learning by doing' phase of the EU ETS. The tighter
caps set by the EU in Phases II and III (2008-20) based on reductions
from the 2005 emissions mean that we can be confident that the
emissions reductions figures we publish, for the current and future
Phases of the EU ETS, are accurate. We therefore have a sound
statistical basis to make carbon budgeting—which applies
from 2008—work.
25. We recommend the UK should only accept emissions
credits (whether from the EU ETS or any other scheme) for use
within UK carbon budgets, if they have come from countries that
have implemented equivalent national emissions targets and managed
to cut emissions below them. (Paragraph 79)
The Government does not accept this recommendation.
Emissions trading is a tool that uncovers low-cost abatement and
broadening the market can reduce costs considerably. The exact
location of where the emissions saving will be made is unknown.
However, this is immaterial given that emissions savings have
the same environmental effect wherever they are made. If we were
not to recognise allowances from the EU ETS, this would suggest
that we do not have confidence in the system to deliver significant
reductions across the EU.
Neither should the recommendation be applied to international
project credits under the Clean Development Mechanism (CDM). This
would undermine the mechanism which is explicitly designed to
include in the global carbon market those countries that do not
have binding emission targets. This would also compromise the
UK's ability to meet tighter and future budgets in the most cost
effective way at a time when the CDM is being reformed and would
have a significant impact on developing countries for whom international
offset credits are a key source of climate finance and a successful
means of engaging them in the global mitigation effort.
Reforming the CDM to move towards an approach based
on standardised baselines will improve the integrity of the mechanism
and ensure that offset credits represent real and additional emissions
reductions. In addition, we have been arguing internationally
that advanced developing countries that are projected to substantially
increase their emissions in the future should take action and
contribute more actively to the global mitigation effort. This
implies moving away from the CDM and possibly adopting carbon
market mechanisms that allow a higher net global contribution
to emissions reductions in certain countries and sectors.
The UK Low Carbon Transition Plan sets out the policies
and proposals we are putting in place to meet our carbon budgets.
The Transition Plan shows that—as we committed to at Budget
2009—our aim is to meet the carbon budgets through domestic
emissions reductions, without use of international credits (outside
of the EU ETS, where limits on international credit use already
apply). Consistent with this, we have set a zero limit on the
use of credits, outside the EU ETS, for the first carbon budget.
However, as the Committee on Climate Change have recognised the
use of international credits may be necessary in transitioning
from the Interim to the Intended budgets.
In addition the EU effort sharing decision already
states that once a global deal is agreed, Member States can only
use credits from countries which have ratified the agreement and
this will apply within the EU ETS.
26. The Treasury has significant influence over
the shape of the Government's climate change programme and the
Low Carbon Transition Plan. Changes in taxation and spending could
have a major impact on carbon emissions and on levels of investment
in low-carbon industries. We believe that this influence should
be acknowledged in departmental carbon budgets. (Paragraph 82)
The Treasury is part of the centre of Government,
supporting and managing departments to improve the efficiency
and effectiveness of delivery of public services. The importance
the Treasury attaches to its role in climate policy is reflected
in its own departmental strategic objectives, which have included
an objective to 'Protect the environment in an economically efficient
and sustainable way' since 2007. The Low Carbon Transition Plan
therefore outlined a role for the Treasury at the heart of the
departmental carbon budget system, supporting departments in delivering
the whole range of government climate change policy. In particular,
the Treasury will help to ensure that departments plan and allocate
sufficient resource to delivery of carbon budgets through the
next Spending Review, and will continue to drive delivery through
its role in overseeing and monitoring the PSA performance management
framework. The Treasury's forthcoming climate change plan will
set out this role in more detail, as well as how the department
will deliver reductions on its own estate and operations.
The Government agrees that environmental and transport
taxes can play a significant role in reducing carbon emissions,
but these instruments also need to meet the principles of good
taxation. Tax policy changes announced in 2009 will save around
3 MtCO2 in 2013-14, mainly through increases in fuel
duty and landfill tax, which will help the UK meet its carbon
budgets. The Treasury will continue to explore the use of taxes
in helping to achieve climate change objectives, in the context
of other long-term fiscal, economic and social objectives.
27. The management of the carbon budget is as
vital as the management of the fiscal budget. It requires the
same level of political attention and civil service commitment,
and the same degree of parliamentary scrutiny. Our successors
should lead the way in rigorously monitoring the robustness of
the carbon budgets and the progress the UK makes in meeting them.
(Paragraph 85)
The Government agrees that careful management of
the carbon budgets is vital, especially given the particular challenges
to monitoring emissions, including the uncertainty range around
projections. The UK is the first country in the world to share
its economy wide emissions between those departments with levers
and influence to reduce them. The LCTP set out the budgets for
each department and those departments will shortly be publishing
their Climate Change Plans which will include how they intend
to monitor delivery of their carbon budgets. The plans will include
indicators and milestones and progress in meeting them will be
included in the Government's response to the CCC annual report
which will be laid before Parliament. Further details on monitoring,
reporting and governance will be contained in departmental plans
and in an overarching document to be published jointly by DECC
and Defra this month.
Department of Energy and Climate Change
1 'Action and ambition for a global deal in Copenhagen'
2009 http://www.unep.org/pdf/climatechange/ActionAndAmbitionForGlobalDealInCopenhagen.pdf Back
2
The Government has committed to tighten the carbon budgets following
an ambitious global agreement, the resulting EU burden sharing
agreement between Member States of a tighter EU target; and following
further advice from the Committee on Climate Change. Back
3
The Committee on Climate Change's first annual report: http://hmccc.s3.amazonaws.com/21667%20CCC%20Report%20AW%20WEB.pdf Back
4
http://www.decc.gov.uk/en/content/cms/statistics/climate_change/gg_emissions/uk_emissions/2008_final/
2008_final.aspx Back
5
Government Response to the first annual Progress Report of the
Committee on Climate Change http://www.decc.gov.uk/en/content/cms/news/PN10_005/PN10_005.aspx Back
6
Committee on Climate Change press release, 14 January 2010, available
from: http://hmccc.s3.amazonaws.com/DECCresponsetoProgress%20-%20press%20release14.01.10.pdf Back
7
HMT/DECC, January 2010, Valuation of energy use and greenhouse
gas emissions for appraisal and evaluation, available from:
www.decc.gov.uk/en/content/cms/statistics/analysts_group/analysts_group.aspx Back
8
Page 47 of the Low Carbon Transition Plan: http://www.decc.gov.uk/en/content/cms/publications/lc_trans_plan/lc_trans_plan.aspx Back
9
Page 49 of the Low Carbon Transition Plan: http://www.decc.gov.uk/en/content/cms/publications/lc_trans_plan/lc_trans_plan.aspx Back
10
Pages 55-9 of the Analytical Annex to the Low Carbon Transition
Plan:
http://www.decc.gov.uk/en/content/cms/publications/lc_trans_plan/lc_trans_plan.aspx Back
11
http://www.communities.gov.uk/publications/planningandbuilding/partlf2010consultation Back
12
http://www.communities.gov.uk/publications/planningandbuilding/futureofcodeconsultation Back
13
Large public and private sector organisations that use more than
6,000MWh/annum of half hourly metered electricity will qualify
for the scheme and all Government departments will participate
in the scheme regardless of their size. Back
| 
